Demand for fragrances remain stable, but consumer behaviour is changing

The power of perfume to allure and captivate – not merely to hide the everyday – is of the ages; in the intervening centuries, new techniques and growing incomes have seen perfume become a multi-billion dollar industry. While perfume tastes have remained relatively stable over the past decade, new research highlights that the different shopping channels show consumers to exhibit different buying behaviour.

Perfumes have been used for millennia as a way of spicing up, or hiding, everyday musk. In the intervening centuries, the process of developing perfumes has changed somewhat. The alchemy of mixing essential oils, flowers and the mystical Ambergris, has been replaced by synthetic techniques and mass production. The 1900s saw further development, as producers capitalised on growing disposable income, with new marketing techniques and new smells. Today, perfumes are available to the masses, with a variety of different tastes and smells available to the rich and poor alike.

Perfume today has become an industrialised product. In the US alone, around $4 billion in revenues were booked for perfumes in 2015. Growth within the market remains relatively modest, however, up 4% on 2014. New research from A.T. Kearney, titled ‘Dollars and Scents: Winning in Fragrances’ explores the effectiveness of a relatively new change in the market: the multi- and omni-channel for the sale of perfume, as well as the channel specific ways of enticing shoppers to buy.

According to the research, the top sellers for both men and women have seen little change over the past five years. For women, Chanel no 5, first on the market in 1921, remains a staple scent, while the early 2000s remains the formative period for many of today’s preferred women’s perfumes. For men, there has also been little change of taste of the top smells. The 1996 Acqua di Gio remains a top seller, while the late 2000s saw the rise of scents that remain staples for many men today.

While the scents have remained relatively stable over the past five years, consumer shopping behaviour has shifted towards the multi- and omni-channel. As part of the research, the firm sought to identify how consumers are leveraging the different shopping channels with regard to purchasing fragrance.

In both categories, in-store and online, replacement is the top reason to buy. Online purchases are slightly more in favour of replacement, at 42% of respondents, compared to in-store, at 36%. In-store, however, saw considerably more impulse purchases, at 19% of respondents compared to 11% for online. Gift buying is relatively equal between channels, at 12% apiece, as was trial, at 12% in-store and 13% online. Advertising has a similar effect on shoppers within both channels, at a lowly 6%.

The researchers also sought to identify in how far shoppers’ buying decisions are affected by various marketing techniques leveraged by in-store factors. According to the self-assessment of respondents, promotion and discount are the most decisive factor, with 32% saying they are strongly influenced by the technique and 32% saying that they are somewhat influenced by the technique.

Service is also cited as a key driver for their purchasing decision, with 25% saying it influences them strongly and 31% saying it influences them somewhat. Free gifts comes in third, with around 50% of respondents saying that they are influenced at least somewhat by this technique.

The techniques with the least effect include spritzers, with 23% of respondents saying it did not influence them at all; a similar number said that they were not affected by point of purchase ads or materials.

The study further considers what consumers find important when leveraging online channels to buy perfume products. The most important feature is that there is a ‘limitless’ assortment, which was cited as important by 71% of respondents. Price sensitivity comes second, with 69% of respondents citing it as very important. Free delivery – one of the hall markets of the online trade – comes third, with 58% citing it as very important and 33% citing it as somewhat important.

Of less importance to the surveyed consumers are peer reviews, with less than 50% citing it as important, product times and info, cited as very important by 14%, and an online advisor, which is cited as very important by just 8% of respondents.

Nemanja Babic, A.T. Kearney Principal and co-author of the report, states, “Today’s consumers still want the luxury and social desirability that prestige perfumes represent, but they also want value and convenience. By understanding and meeting the needs of both in-store and online customers, fragrance marketers will reach consumer segments more economically and effectively.”